Abstract

The employer of last resort (ELR) proposal provides an alternative to unemployment as the primary means for the stability of the currency's value. Through a "buffer stock" of public workers, it facilitates labor flexibility to and from the private sector. In this way, the ELR acts as an automatic stabilizer, sustaining full employment while promoting price stability. This article simulates an ELR in Argentina using an adaptation of the Fair Model (FM) to examine the effects of the program. Simulated within the historical economic cycle, it is shown that the ELR would allow (permanently) full employment, paying a living minimum wage, without significantly compromising price stability. In addition, full employment would not give rise to an external sector crisis, that is to say, it would not conflict with the "external restraint".